Forum Replies Created
Hi Chars,
I think the large lifestyle changing topic you have going here would best be solved around a table with yourself and both your parents over a cup of tea and an hour or two of crunching numbers with various scenarios.
My understanding of your posts is that all three of you (and bub) are living in the one PPoR, with you each having 33-1/3% of the title.
What was the group’s intent when first purchasing the unit ?? Were you always going to live there, or was it simply to get you ‘on your way’ by building some equity in a property. Either way it sounds as if you have nice parents who are looking after your interests.
My first alternative would be to dump 20K of your burning 24K into your portion of the PPoR. That’ll increase your equity in the PPoR up to 56K, which you can leverage up to buy an IP a bit later. Most importantly it reduces your NTDD. This assumes that there isn’t some over-riding domestic thing that over-powers the financial side of the options you have and you are extremely keen to do a deal.
The cashflow position of the IP you’re looking at would look something like this, I’m guessing ;
Capital
Purchase Price 280K
Stamp Duty ~ 9 or 10K
All other Costs ~ 3KYour equity in PPoR currently ~ 160K – 124K = 36K
Loan 293K (LVR not good…guarantor there somewhere)Cashflow
Rent of ~ 9K
Interest of ~ 20.5K
Other costs of ~ 2.5 to 3K
Loss of 14K p.a. (After tax loss no idea with your circumstances)At 280K purchase price, the IP will need to increase by at least 5% p.a. just for you to break even on the deal. This is real big negative gearing stuff.
This is alot to bite off for a lady in your situation (given the data you’ve provided), and looking at the deal, if I was either the banker or your parents having to go Guarantor, I’d pull the plug on the deal.
Hence, my suggestion to simply reduce your NTDD.
Regarding stamp duties, I was under the impression if your parents bought your 1/3rd out, they would simply apply to the Titles Office and submit the reasonable figure for your 1/3rd, office would confirm and then they’d only pay the stamp duty on that 1/3rd amount. Not that grim really.
Does any of that make sense ??
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Well done Jenny for finally getting it leased. Looks like changing PM’s was a good move. It’s a shame bad PM’s don’t wear a cap notifying you of the fact up front hey.
Sounds like you were touch and go there for a while about pulling the plug on HB.
Good luck with it all.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Hi Richard,
Sounds like a great service. Hope you don’t mind me indulging.
What’s the best method you know of, for quickly and efficiently evicting a street wise cunning tenant who refuses to pay rent and is smashing your IP to smitherines…and as an added bonus…cannot read or write, or refuses to acknowledge written communication ??
To add to the heady mix, someone who has been a few laps around the tribunals and knows every trick in the book to delay proceedings…thanks to valuable service providers such as yourself.
My experience is they either ignore letters, cannot read them or simply burn them or throw them in the bin.
What quick and efficient method is available that doesn’t involve any paper and/or writing words on a page ?? I’d be most interested to hear your cost efficient solutions.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Hi Pickworth – great to see you posting as I know you have a wealth of knowledge and experience to add to the forum. Geez, you should be teaching this stuff at Uni.
In regards to your query, I think the auction houses have this sort of thing down to a fine art as a vendor with their “as is, where is” terminology. If this prop. was up for auction, that is exactly the basis on which the Purchaser would accept it. Other choice of course is to walk away…depends on the size / cost / impact of the infraction and the likelihood of your gaining the necessary approvals.
Ethically, it seems sort of ‘gut feel’ right that the vendor should be responsible, but I think you’ll find the Purchaser ends up with it in his / her lap.
Love to hear more from you Pickworth.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Best way to approach negotiations ?? Here’s my opinion,
From a Buyers perspective
1. Go in clean (no conditions)
2. Go in really low
3. Go in hard (no fin. clause, 10% cash on the nose)
4. Know your walkaway price
5. If you or your partner are going to whinge and cry if you don’t get it, pay full price.From a Sellers perspective
1. If it’s not a clean offer and equal to asking price – reject it outright – don’t counter.
2. Know your reject price.
3. If you or your partner are going to whinge and cry if you don’t sell it, just accept the offer.Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Thanks Jules,
I have no direct experience with Govt’s buying land off people, but I did witness what they did in Stirling and Gwelup to the poor ol’ Greek and Italian market farmers next to the Mitchell Freeway…it wasn’t pretty. It’s a bit scary when they are able to compulsorily ‘acquire’ your dirt at a price they deem to be reasonable. You may have magnificent plans for the land which all get thrown away.
This is now a concern for us. I might call up the buyer and tell him we are now not interested in any offer, regardless of price. Hmmm, a worry.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Hiya Sparky,
It’ll be clean – don’t worry.
Despite our multicultural society here in Oz, I believe you are asking a really detailed question on a very, very specific point of law.
First question – I may be wrong, but I’d be surprised if we have anyone on the forum who is an expert on Tunisian property construction laws as pertaining to foreign nationals injecting funds and the tenure and future rights of said funds ?? [blink]
As to the second cultural question, maybe a trip down to the local Tunisian embassy (is there such a thing ??) might be your best best.
Maybe this one deserves the attention of a specialist lawyer.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Hi Kyles,
Once again…this topic of “PPoR vs rent and invest” has been covered pretty extensively on this forum over the past week or so.
If you have a tough mental attitude, and are serious about sacrificing now for future benefits, why not purchase the absolute cheapest run down PPoR you can find and pay it off ASAP. Whatever you do don’t burden yourself with a non-tax deductible debt on a PPoR right up to the absolute limit that the lending institutions will allow you to go. You’ll never dig yourself out of that hole.
If your limit is 250K, how about a cheapy 2 bed flat somewhere for 60 or 70K. Pay it off completely and then get stuck into the investing. The banks will be falling over themselves to take your title deed on as security.
Good luck with it all.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Oh and can someone please email me at [email protected]
Oh and can you email me anytime so we can have a little secret chit chat so I’ll pump my business figures up a bit and we can conveniently ignore the rest of the forum trying to learn about the subject.
Come on guys, this is supposed to be an open forum…or that’s my impression of Steve’s intent, not some general meat market to pick up newbies and swift them off.
What’s wrong with answering clea’s question on the open forum so everyone can learn ??
clea – checkout some recent threads in the Help Needed section, this subject has been covered pretty well in just the last few days. Adapt the logic for your personal circumstances.
Hi exec,
I’m not that intelligent when it comes to ‘book-learning and the like’, so I take it as a compliment that you credit me with any form of wit…whatever that is.
“pay the S/D upfront for an immediate tax benefit.”….”my source of reference queries and answers have come from a qualified Accountant. I can`t be sure whether he is totally correct, but I am assuming he is.” Looks like you better revisit your assumption on this one. I was under the guise that it formed part of your CGT base and could not be claimed immediately.
“Located in Perth WA northern suburbs a family home”….”although stamp duties can be less and more in some states.” Sorry exec, the 16.7K for stamp duty quoted was for current WA law. I took a wild guess that maybe you were talking about WA.
“I do not see many investors sharing rates etc.. with there (sic) tenants on investment properties.” ….you really do need to get out more into the big bad world exec.
Other than that, I thought your scenario was just tops. Once again, I am very interested also in finding investors who find deals like yours attractive.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Couldn’t help myself. No Munjy, the picture looks a bit like this ;
Purchase base for CGT
Purchase Price : $ 420K
Stamp Duty on Title : $ 16.7K
All other acq costs : ~ $ 3 KTotal cost to go into deal = $ 440 K
Lose $ 12K p.a. (less tax benefit @ top rate) comes down to about $ 7K p.a. = $ 14K out of your pocket for the 2 years.
Sell in 2 years for $ 500 K (assuming vendor / tenant…now turned purchaser can pay)
500 – 440 = 60
After the 50% discount, your CGT liability would take out another 14. (47% of 30)
So, we’re down to 60 – 14 (CGT) – 14 (cf loss for 2 years)
All up $ 32K left for you after exposing your 440K to two full years of risks ?? This is best case scenario.
32/440 discounted over 2 years is a full return of ~ 3.6% compound per year. Great return hey !!!
I just love this “firm” thing, cracks me up. [biggrin] Sounds like we are selling a dodgy ’77 Toyota Corona for $ 400 in the local rag.
Does it look attractive to anyone, other than the vendor proposing it ?? You’d get more putting your money in the bank.
“Would there be anyone who would know of these type of investors and or put me in touch with this type of person wanting to do a private purchase of this nature on this quality home.”….Me too, if anyone knows anyone at all who thinks 3.6% is really attractive given the risks, can ya let me know too. My whole portfolio is for sale for this type of return. Where are these investors, rather than these pesky tyre kickers ??[biggrin]
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Hiya Ronulas,
Well it’s all very well to stand up and say that in a seminar isn’t it ?? If you challenge them at a seminar, after a while you’re told to sit down and shut up…or “That’s a great question, I’ll address that later in my seminar”…and sure as eggs it’s never covered.
But as you’ve found out when you come back after the ra-ra session and you crunch the numbers you find the “normal” limit has been reached. What’s your definition of normal ?? What’s your definition of limit ??
By “normal”….I mean normal risk levels for normal investors loaning normal amounts of money off normal banks at normal rates over a normal time frame.
Throw in renos, flips, dips, splits, wraps, packs, wacks, mezzanine, lease backs, butchers, barbers, rich uncles, Japanese banks, the guy around the corner, guarantors, loan sharks…and a myriad of other ‘possible’ options and the world is your oyster my friend.
Really, it all boils down to what are you prepared to risk ?? For me, I draw the line whenever my kneecaps are put up as collateral….but it’s all possible….as the seminar presenters all love to point out.
Think outside ‘the square’ by all means, but try and sift out through what’s possible and what’s reality for you. I mean, it’s possible to fly to the moon…but you ain’t likely to be doing it any time next week.
What now you ask ?? How about sit back and enjoy family life for a while, all the while paying down some or all of your NTDD and letting time build up the equity.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Hey guys,
If you are going to quote me, at least try and quote me in context.
If you care to review the thread you took that piece from, you’ll notice the capital gain aspects of the equation was fully addressed.
Please don’t quote only half my post and then turn around and say I haven’t addressed the major aspect of an issue, when the other half you didn’t quote addresses it ??
Thanks guys.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
When you say “strong secure tenants” that are only prepared to pay 4.95% gross yield, I can only presume you mean that you are physically fit with good locks on the doors…and aren’t commenting at all about your ability or willingness to pay a decent rent level.
After the half rates (500) / half water rates (another 500) / half maintenance (who knows – say 1000…hope the water heater doesn’t die) and full land tax bill (1,000 or more depending on how you structure it) are deducted from the future Landlord’s cashflow stream, that 4.95% gross level will be well down to 4.2% for a proper nett yield. If my estimates are wrong…it may vary between 4.1 and 4.3%.
If you borrow funds at 7%, this deal will strip about $ 12,000 out of your pocket every year. Whoever ‘helps you’, let’s hope they have deep pockets. I’m sure you’ll find plenty of people out there quite willing to chip in $ 230 p.w. for you to continue living in your own home. What a deal…where do I sign up ??
Hmmm, I must be a tyre kicker.
Sorry to disturb your sales pitch, I’ll bug out now and leave it to the people that love to invest in residential houses….beautiful.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Talk to any principal of any agency and they will very quickly tell you they couldn’t possibility accept any liability or responsibility whatsoever for the security of a property or any of it’s contents during a “Home Open”.
Their suggestion is to hire a private security firm to guard every conceivable liability you think you may be exposed to. Great suggestion – that’ll really work ??
If you read the fine print of your insurance policy, you’ll also discover that most insurance companies will drop you like a hot potato if you’ve opened the doors up and let complete strangers walk thru your house unimpeded.
The agent standing there, taking names and phone numbers means absolutely nothing at all. Were those names & mobile phone numbers they jotted down 100% correct ?? Who checked ??
You are on your own folks with this one. Never be under the impression the agent will ‘look after it’.
Take no comfort at all from the “Yes folks – leave it with me, I’ll look after it for you and I’ll brief you in an hours time when it’s over.”
When push comes to shove, you quickly discover “it” = “nothing”.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
What’s the big deal ?? The owner has approval to do it from the authorities and it’s on his property. Job done.
It sounds as if the builder has done exactly as Tools suggested – they advised what they were going to do – not seek permission….Tools didn’t mention anything about the timeliness of the notice.
It looks like a pretty standard industry wide practice (probably learnt at great expense and stress) to verbally advise the day before…probably close to 5pm, so that little American style lawyer wannabe’s can’t start running around the place whinging to anyone that will listen – screaming “But what about my rights” !!
There’s probably 50 things about the construction going on next door that the tenant knows nothing about…once again – so what ?? You didn’t mention why the wall needed to come down ?? Was it simply for site access (temporary) or is there something more permanent going up instead ??
My suggestion to the poor hapless tenants who ‘just want peace and not to be pushed around’, that if they want those two things…go and purchase their own place !!
Why do they need your help ?? What would constitute “success” in your eyes ??
Sounds like the tenants should see a mortgage broker about financing their own little castle if they are all bent out of shape about an owner going about improving his property.
Probably not what you wanted to hear Hellman, but I believe property owners should almost always have the right to go about their business and improve their properties without constantly being tripped up by peripheral 3rd parties…tenants, councils, heritage listings, tenants, conservation councils, sacred sites, neighbours, did I mention tenants (stakeholders I think the new flash word for it is) who all want a greater say in what happens than the owner.
I say if you really want to have your ‘rights’ imposed…stump up the cash and become the owner.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Originally posted by ptdee:As we aren’t working in Oz at the moment we get
nothing back from the tax man.Hiya,
This isn’t advice either, just a suggestion ;
Ask your father take a real close look at exactly what he is doing with your return w.r.t. your IP. If you are a non-resident for ATO purposes, you may be able to carry forward that loss every year.
When you do eventually go back to Oz and start earning taxable income, you may find that the losses carried forward for all those years can be offset. Your first or second year back here (depending on the size of your income) will effectively be tax free….so it’s not all that grim.
Ask your father to check it out…I’m sure he’s right on top of this anyway.
I think you have a jolly nice problem there (you’re in the general arena of nice choices). Well done for putting in the hard yards and making the right choices in the past to get into that position.
For what it’s worth, I’d be looking to purchase again, not pay down your IP – preferably something that is low hassle and high cashflow…hell…aren’t we all looking for those ??
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
If you are asking this question you have obviously had that chat with your banker at the NAB that you made the appointment with. Your best source of info is the chap or chapess who is offering it to you.
This is pretty much how they fund the bigger Comm. deals, rolling it over every 90 days…normally.
Perhaps the answer to your question would be far shorter and easier to understand if, the question was rephrased and started with “what is similar” between the two….
Did they gag at 7 ??
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
In my experience with CIP’s, vendors typically lower the asking price to a level where the yields become attractive to purchasers regardless of tenancy lengths, especially when they have been given the ‘inside track’ on the tenant’s future intentions.
Contact the tenant’s Director and ask him/her their intentions.
When you say the ‘lease runs out’…do you mean the main portion of the lease with say a 3 yr option hanging off the end, or has the main lease run out 6 years ago and they’re just about to expire their second 3 yr option….all these things will be strong indicators.
Peruse the lease for minute details…it will all be in there.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Hiya exec,
Deals are about very specific numbers – not vague wafty notions.
I bet you’ve got these numbers floating around in your head ;
Price $ 450K
Rent $ 300 p.w.
Outgoings : Landlord’s a/c
Bond : 4 weeks rental….good luck in your search.
These are the numbers I’ve got floating around in my head ;
Price $ 300K
Rent $ 750 p.w.
Outgoings : Tenant’s a/c
Bond : 4 weeks rental
Bank guarantee signed over to L/L : 3 months rent….call me tomorrow and the deal will be drawn up, subject to an inspection of the prop.
I suspect you’ll agree, the vague notions get very quickly discarded and when it comes down to the nut-cutting of specific figures we go a little bit…sideways.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
